Conduit sues Tether over $2.76M frozen USDT

cryptonews

Oct 07

Tether has been sued by cross-border payments company Conduit Technology over $2.76 million in USDT that has remained frozen since September 2025, with Conduit claiming no court order or government ...

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The case names Tether Holdings, Tether International, Tether Operations and Tether Investments as defendants.Conduit says Brazil never aske","collect":0,"end_time":0,"defaultTopTitle":"crypto.news","property":[],"viewcount":null,"language":"en","relate_stocks":{"TMF":"3倍做多20年期以上国债ETF-Direxion","TLTW":"iShares 20+ Year Treasury Bond Buywrite Strategy ETF","TLT":"20+年以上美国国债ETF-iShares"},"translate_title":"Conduit 起诉泰达币冻结 276 万美元 USDT","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"TLTW":0.6,"US12M.BOND":0.64,"US5Y.BOND":0.64,"TMF":0.6,"TLT":0.6,"US2Y.BOND":0.64,"US30Y.BOND":0.64,"US3Y.BOND":0.64,"US6M.BOND":0.64,"US10Y.BOND":0.64,"US7Y.BOND":0.64},"content_text":"Tether has been sued by cross-border payments company Conduit Technology over $2.76 million in USDT that has remained frozen since September 2025, with Conduit claiming no court order or government request directly targeted its treasury wallet.\n\n\nSummary\n\n\n\nConduit sued Tether over $2.76 million USDT frozen from its corporate treasury wallet in 2025.\nConduit alleges Brazilian police never identified its wallet among addresses requested for freezing by authorities.\nTether’s current terms allow token freezes when it considers action prudent or legally necessary itself.\nThe lawsuit seeks access restoration, at least $2.76 million damages, punitive damages, and reserve profits.\nTether had not publicly responded to Conduit’s allegations as of October 7, available records show.\n\n\n\nConduit alleged in an Oct. 5 complaint filed in the U.S. District Court for the Southern District of New York that Tether restricted access to the funds without a legal claim against the company. The case names Tether Holdings, Tether International, Tether Operations and Tether Investments as defendants.\nThe payments company says the USDT formed part of its own working capital and was not customer money. It wants access restored and seeks at least $2.76 million in damages, along with other compensation the court may award.\nConduit says Brazil never asked Tether to freeze its wallet\nThe dispute traces back to a Brazilian Federal Police investigation opened in 2024 into financial intermediary Bull Intermediação de Negócios and related company Onix Intermediações.\nConduit previously provided payment services to Onix. Its lawsuit says the relationship ended on April 22, 2025, nearly a month before Conduit created the treasury wallet at the center of the case on May 20.\nThe company claimed neither Onix nor Bull owned the wallet, deposited money into it or used it for transactions.\nAccording to the complaint, Brazilian police later shared a set of suspected cryptocurrency addresses with Tether’s T3 Financial Crime Unit during an investigation. Conduit says its address was absent from that list.\nThe filing cites a July 2026 submission from Brazilian authorities that, according to Conduit, indicated T3 identified other addresses using its own analysis. Conduit argues its treasury wallet entered the freeze process through that separate screening.\nIts lawyers later contacted Brazilian investigators and were allegedly told the authorities had not chosen Conduit’s address for blocking and did not know what criteria Tether used to select it. The underlying Brazilian filing was not publicly available with the U.S. complaint, so that account remains Conduit’s characterization of the foreign investigation.\nConduit says Tether blacklisted the wallet on Sept. 24, 2025. At the end of September 2026, the address still held approximately $2.76 million in USDT, according to the lawsuit.\nTether’s terms allow it to blacklist USDT wallets\nUSDT differs from cryptocurrencies such as Bitcoin because Tether retains technical controls that can prevent tokens held at selected addresses from moving.\nTether’s published terms state that it can freeze tokens when required by law or government authorities, when an address is connected to an investigation, or when the company considers restrictions prudent under its policies.\nConduit’s lawsuit challenges whether those contractual and technical powers gave Tether legal authority over its particular holdings. The company argues that Tether had no ownership claim to its USDT and says no enforceable contract between the parties authorized the freeze.\nThe court will therefore have to consider the legal claims separately from Tether’s technical ability to blacklist an address.\nTether regularly uses that capability in cooperation with law enforcement. The issuer said in April that it supported the freezing of more than $344 million in USDT connected to two TRON addresses targeted by U.S. authorities.\nIts enforcement activity extends through T3, the financial-crime initiative created with TRON and blockchain intelligence company TRM Labs. As previously reported in crypto.news coverage of T3 Financial Crime Unit passing $450 million in frozen assets, the group said its cases have involved suspected hacks, drug trafficking, terrorism financing and North Korea-linked activity.\nConduit does not dispute that Tether can technically stop USDT from moving. Its case focuses on whether the issuer had sufficient legal grounds to exercise that power against Conduit’s treasury funds.\nConduit says the freeze hurt its payments business\nBefore Tether blocked the wallet, Conduit says it used the account to hold capital needed to support international payments.\nThe complaint states that the address handled 4,427 transactions involving 78 counterparties and more than $1.1 billion between May and September 2025.\nConduit says losing access to $2.76 million reduced the liquidity available for pre-funding payment routes. The company links the restriction to lower transaction capacity, layoffs and office closures, though the court has not tested those claims.\nEfforts to recover the funds continued into 2026. Conduit says its lawyers contacted Tether in June before sending a formal demand on Aug. 19 that gave the stablecoin company five business days to remove the restriction.\nAccording to the filing, Tether had previously directed Conduit toward Brazilian authorities but did not release the USDT after those communications.\nConduit now brings claims including conversion, unjust enrichment, breach of fiduciary duty and alleged violations of federal computer-fraud law. It has requested a jury trial.\nBeyond restoring access to the wallet, the company wants damages for alleged losses tied to the freeze and punitive damages if the court finds them warranted.\nAnother claim concerns income generated from the assets backing the blocked USDT. Conduit argues that while it could not use its tokens, Tether retained reserve assets connected with them and could earn returns from those reserves. The lawsuit asks for an accounting and the return of any income the court determines belongs to Conduit.\nA second lawsuit challenges Tether’s freeze powers\nThe New York case follows another lawsuit questioning when a stablecoin issuer can restrict privately held USDT.\nTwo Thai businessmen sued Tether in August over approximately $42.4 million frozen across 10 Ethereum addresses in October 2025. The plaintiffs said Tether acted after an informal request from a U.S. Homeland Security Investigations agent before authorities secured a seizure warrant.\nAs detailed incrypto.news coverage of the separate $42.4 million USDT freeze lawsuit, a federal magistrate later issued a warrant in February 2026 covering tokens tied to an alleged $61 million investment-fraud operation. The plaintiffs argue the later warrant could not retroactively authorize the earlier freeze.\nThe government thanked Tether for assisting with the related seizure operation, while the Thai plaintiffs are contesting the treatment of their specific tokens. Their allegations remain unresolved.\nConduit’s case involves different parties and a separate investigation. Its complaint centers on the claim that Brazilian authorities never instructed Tether to freeze the company’s treasury wallet.\nThe next procedural steps will include service of the lawsuit and a response from Tether. Depending on how the defendants respond, the case could move into dismissal proceedings, discovery or another early-stage motion before the court considers Conduit’s underlying claims.\n\n\n\n\n\n                You might also like:\n            \n\n                Bitcoin.de plans new setup after MiCA license failure","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":false,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"isVideo":false,"video":null,"symbols":[],"gpt_button":0,"need_auth":false,"need_login_tip":false,"code":"91000000","status":"200"}}}